The PNB-MetLife deal moved a step forward to being operationalised with the Insurance Regulatory and Development Authority giving its nod for induction of the bank as a shareholder in the private life insurer.
This approval, which came at an IRDA board meeting on August 31, will pave the way for PNB to acquire a 30 per cent stake in MetLife India Insurance.
IRDA nod for the induction of PNB as a shareholder came a little over a year after the public sector lender had announced plans to pick up 30 per cent stake in MetLife India Insurance for an undisclosed amount.
The insurance regulator’s nod has however come with certain conditions including appointment of directors on the board of the insurer by PNB, reduction in equity stake by some of the existing shareholders and maintaining solvency margin as per the directions suggested by IRDA.
The IRDA board has also approved inclusion of a limited liability partnership (LLP) as an Indian promoter. Such an LLP can, however, neither be a foreign LLP nor should any of the partners in the LLP be foreign entities, it said.
The IRDA has for some time been examining the inability of some of the existing shareholders of MetLife to subscribe to the capital calls due to certain applicable regulatory restrictions. This constraint was impacting the solvency position of the insurer and limiting its ability to grow.
The board has further advised IRDA that in public interest and with a view to protecting policyholders’ interest, the regulator may issue directions under Section 34 of the Insurance Act, 1938, subject to compliance with due regulatory process.